When Congress debated a bill several years ago to create a new regulator for the government-sponsored enterprises, many parts were controversial, but nearly all lawmakers agreed that the agency should be independently funded and not subject to the appropriations process.
Yet some Republicans who supported that idea at the time are now backing plans to force a different financial regulator, the Consumer Financial Protection Bureau, to go to Congress for its funding.
Why the change of heart? Supporters argue the new agency has unprecedented power that needs to be checked, but others contend the GOP simply wants to undercut an agency it never liked to begin with.
"It's a political maneuver designed for Congress to limit the influence that the CFPB has," said Kevin Jacques, the Boynton D. Murch Chair in Finance at Baldwin-Wallace College. "For members of Congress who didn't like it, this is a back-end way for them to make sure the CFPB is not particularly strong, and this is to make sure that they don't have the kind of funding they need to … do their job."
Rep. Barney Frank, the Massachusetts Democrat who helped create the CFPB in the regulatory reform law enacted last year, agreed. "Efforts to put CFPB through the appropriations process are not born from a matter of principle, but just because they don't like the CFPB," he said in an interview Friday.
Frank said the change of position from the GSE debate to now was easy to explain: Republicans liked the Office of Federal Housing Enterprise Oversight, which regulated Fannie Mae and Freddie Mac until 2008 when it was replaced with an independently funded agency, and they don't like the CFPB.
"I haven't met a member of Congress who has any particular preference for whether an agency is directly funded or [funded] through the appropriations process," Frank said. "I think you've seen that with my Republican colleagues: many of them liked OFHEO, so they wanted it insulated, and they don't like CFPB, so they want to subject it to further controls."
